Thoughts in Time

The New York Times had a sophisticated column recently titled “In Private Pay, an Implicit Progressive Tax.” Ultimately, what the article says is that the most productive workers are subsidizing the least productive. These people aren’t lured away to other firms who are willing to pay more because there are other reasons why they may take or stay in a job.

This fits perfectly with the research I did for my Masters Capstone (”Thesis”) at UPenn. It’s also an important lesson for startups who are looking to recruit a rockstar team, and is an important part of the product I’m currently developing for my new startup.

What does someone get from a job? Well, from an economists standpoint, a person trades their time for money. However, this is not all one gets from a job. There are two key ideas from Psychology that could come into play.

1. Manifest Needs - Basically, we all have psychological needs. This could be a need for affiliation, or a need for achievement. Different jobs, company cultures, or even management styles lead to differing levels of psychological needs fulfillment. One way to think of this is how a particular job pays an individual psychologically.

2. Strengths usage - We all have certain strengths. In Psychology, a particular set of strengths called Character Strengths, has been developed that helps us understand what we as individuals are particularly good at. My strengths tend towards learning, creativity, and curiosity. Some of my friends have top strengths of Wisdom, or Social Intelligence. My wife’s top strength is Bravery (hmmm ). Different jobs enable a person to use their strengths less or more. Using strengths in new ways has been shown to lead to increased happiness and decreased depression, and is hypothesized to lead to increased performance (makes sense right?). This is another way that a particular job can compensate an individual.

3. Rewards versus orientation to work. Research has found that individuals tend towards three different orientations towards work. 1) work = way to get $ to do other things 2) work = way to gain power / prestige as you move up in title 3) work = way to see your impact on the world. The interesting thing here is that if there’s a mismatch between someone’s orientation and the way a job rewards them (i.e. cash bonus vs. titular promotion), it can lead to unhappiness on the employee’s part.

What does this mean for a startup? It means that since you’re cash poor, it’s important to maximize fit along these other dimensions. Even though you might plan to offer equity ownership to make up for the difference, if you understand the ideas above, you will be making sure the person you’re hiring is getting paid in other ways. This way you CAN afford the highest quality talent, and will build an A team with A level fit.

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